Every year, around this time, my phone starts ringing differently.
It’s not that anything dramatic has happened. No single event. No one bad month. It’s the accumulation — the quiet, grinding effect of winter on a business that was already running close to the edge.
If you run a business in New Zealand, you already know this rhythm even if you’ve never named it. Summer carries you. Autumn is steady. And then winter arrives, revenue softens, and every fixed cost you have keeps turning up on schedule regardless.
In my experience, July and August are the months when underlying fragility in a business stops being theoretical and starts being a cash flow problem you can’t ignore.
Why This Stretch of the Year Is Different
Winter doesn’t cause insolvency. It exposes it.
A business with healthy margins and a cash buffer can absorb a quieter few months without much drama. A business that’s already been running thin — covering one gap with next month’s GST, paying a supplier late to make payroll, treating PAYE as a flexible expense rather than money that was never really the company’s to spend — has no buffer left to absorb anything.
So when winter trading slows down, the businesses I see come under real pressure aren’t usually the ones having a bad winter. They’re the ones who came into winter already stretched.
The GST Date That’s Coming Whether You’re Ready or Not
If your business files GST on a two-monthly cycle, your return for the May–June period is due on 28 July. That date doesn’t move because trading has been quiet. It doesn’t move because a big invoice hasn’t been paid. It arrives exactly on schedule.
I see the same pattern every cycle. A business owner knows the GST is coming, knows the bank balance won’t cover it, and hopes something changes in the next few weeks. Usually nothing does. And then 28 July arrives, the return gets filed, and the debt sits there — accruing use-of-money interest from day one.
This is one of the most fixable problems I deal with, provided people act before the date rather than after it. Once you’re past the due date and the debt is sitting on your IRD account, your options have already narrowed. Before the date, you still have all of them.
Where the Pressure Compounds: Retail, Hospitality, and Trades
Three sectors feel this particular squeeze hardest, and for different reasons.
Retail and hospitality are coming off a genuinely quiet trading period. Discretionary spending drops in winter, and for many operators the gap between fixed costs and winter revenue is the widest it will be all year.
Construction and trades often slow physically — weather affects programme, and some clients pause projects over winter. But subcontractor payments, supplier accounts, and PAYE obligations don’t slow down with the work. This is where I most often see GST and PAYE being used, quietly and usually with every intention of paying it back, to bridge a gap that keeps getting wider.
Seasonal and tourism-adjacent businesses are managing the most predictable version of this problem, and ironically are sometimes the worst prepared for it, because the same seasonal dip happens every year and somehow still catches people out.
If you recognise your business in any of these descriptions, that’s not a judgement. It’s simply the pattern I see, every winter, without exception.
The Warning Signs I Look For
When I sit down with a director who’s worried but not yet sure whether things are serious, I look for a handful of things:
Are you using this period’s tax money to pay last period’s bills? That’s a sign the gap is structural, not seasonal.
Are you having the same “we’ll catch up next month” conversation you had three months ago? If the plan hasn’t worked twice, it’s not actually a plan.
Is your accountant’s advice starting to sound like a polite version of “you need to talk to someone else”? Accountants are very good at telling you the numbers. They’re not always the right person to help you act on what the numbers mean.
None of these signs mean liquidation is inevitable. They mean it’s time to look at the business properly, with someone who deals in exactly this kind of pressure, before the options narrow further.
What to Do Before the Pressure Peaks
Forecast the next three months now, not in three months. A simple cash flow forecast — money in, money out, by week — tells you exactly when the gap will bite and how big it will be. Most directors I meet haven’t done this. It takes an afternoon and changes the entire conversation.
Talk to IRD before the GST date, not after. If you can already see you won’t be able to pay on 28 July, that conversation is far easier to have on 20 July than on 30 July.
Separate what’s seasonal from what’s structural. A quiet winter is normal. A quiet winter that reveals you can’t cover fixed costs without borrowing from tax money is a different conversation, and worth having honestly with yourself.
Get a second set of eyes on the numbers if you’re not sure. Not because the business is necessarily in trouble — but because an outside, experienced view at this point in the cycle is far more useful than the same view three months from now, after the next GST date has come and gone too.
A Word on Directors’ Obligations
I’ll keep this simple, because it matters and it’s often misunderstood. As a director, you have an ongoing duty not to let your company keep trading, and keep incurring debts, once you know — or should know — that it can’t meet its obligations as they fall due. Winter cash flow pressure doesn’t excuse that duty. It’s actually the exact situation it was designed for.
Acting early isn’t just good business sense. It’s part of how you protect yourself personally as well as the business.
Frequently Asked Questions
Q: Why does my business always struggle more in July and August?
For most NZ SMEs, winter brings a genuine drop in trading activity, particularly in retail, hospitality, and weather-exposed trades. Fixed costs and tax obligations don’t reduce in line with revenue, so the gap between income and outgoings widens. If your business has little buffer, this seasonal dip can tip an otherwise manageable situation into a genuine cash flow crisis.
Q: What happens if I can’t pay GST on the due date?
The return should still be filed on time even if you can’t pay in full — late filing penalties are separate from late payment penalties, and filing on time keeps your position clearer. Use-of-money interest will start accruing on any unpaid GST from the due date. IRD will generally engage on a payment arrangement if you contact them before or shortly after the due date, rather than after enforcement action has started.
Q: Is a quiet winter a sign my business is insolvent?
Not necessarily. Seasonal slowdown is normal for many NZ businesses. The concern isn’t the quiet period itself — it’s whether the business has the buffer to absorb it without using tax money or supplier payments as a substitute for working capital. If you’re not sure which situation you’re in, that’s worth finding out properly rather than guessing.
Q: When should I get advice rather than just watching and waiting?
If you’re forecasting a gap you can already see and don’t have a credible way to close, that’s the time to get advice — not after the gap has become an unpaid GST return or an unpaid supplier on the verge of legal action. The earlier the conversation, the wider the range of options available.
Suggested Internal Links
Signs Your Business May Be Insolvent
GST & PAYE Arrears: What Every Director Needs to Know
Director Personal Liability in NZ
What to Do If You Receive a Statutory Demand from IRD
Liquidation vs. Voluntary Administration
How Much Does Liquidation Cost in New Zealand?
